New Delhi: India's largest passenger carmaker Maruti Suzuki India Ltd may not meet 10% sales growth target, but remains hopeful of selling 400,000 diesel vehicles in the current fiscal 2012-13, Executive Director Shashank Srivastava told CNBC-TV18 Friday, reflecting pressures from slowing economic growth and high interest rate regime.
"I think clearly the growth targets, which were thought of at the beginning of the year taking into account the previous two years before the last year, therefore it was projected generally that the growth patterns would be about 10-13%, I am not sure how it is going to pan out. The first quarter doesn't seem to be going too well," Srivastava said.
However, the demand for diesel-powered vehicles has surged in the country following the widening gap between prices of petrol and diesel. Diesel cars now contribute towards about 40% of total sales in the country, as against less than 20% a few years ago.
"Since June 2010, when the difference between petrol and diesel was minimum, it was about Rs 9.83 at that time, we have seen the difference growing up to almost Rs 25-26 now, even after the recent cut in the petrol prices. So, obviously there has been a shift in demand towards diesel... because of the high running cost, the petrol vehicles demand has been coming down," he told the channel.
Indian oil marketing companies Thursday slashed prices of petrol by Rs 2.46-3.22 per litre, in a second reduction this month as global crude oil prices remained stable.
Following the rise in demand for diesel-run vehicles like Swift and Dzire models, Maruti Suzuki has drawn plans to build diesel engine manufacturing unit at its Gurgaon facility at an investment of Rs 20 billion.
The company is currently having a week-long maintenance shutdown at its plants, which it believes will help in reducing the inventory pile up, Srivastava said.
Earlier this month, Maruti Suzuki had stopped production of its petrol variants, like Alto, WagonR and Eeco, by around 8,000 units on three days -- May 25, 26 and June 2 because of less demand.
Besides Maruti Suzuki, other automakers like Tata Motors and Toyota Kirloskar Motor also recently announced cutting production of petrol-driven cars due to piling inventories with consumers opting for diesel-run vehicles in view of higher petrol prices.
Maruti Suzuki currently produces 900,000 units per year at its Gurgaon facility, which houses three fully integrated plants. It makes 550,000 vehicles per year at Manesar, which has two fully integrated units and the third assembly line is in advanced stage of completion.
According to industry body Society of Indian Automobile Manufacturers (SIAM), Maruti Suzuki's car output declined 8.42% to 87,220 units in May.
Shares of Maruti Suzuki Friday ended at Rs 1,169.75 on the Bombay Stock Exchange, up 4.58% from its previous close.